Ground Land Market: Passing Fever, Real Value Stay

Land fever in Ho Chi Minh City has left no less concern for people with real needs.

However, in most of real estate experts’ opinion, in the face of rising demand, the land fund does not expand, and with the general psychology of consumers, real estate land market still has a real value and a potential, great development.

Ground value is always attractive

Last weekend, in Ho Chi Minh City, was held a talk about the story, should sell off in the ground drunk? Here, most experts point out the common view, any real estate segment has certain opportunities, even if the market goes up and down.

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Particularly with the land segment, the investment opportunities are still very large, the problem is that investors must recognize what real estate can bring real value of the market because this is the special factor to help increase liquidity and value.

According to Le Hoang Chau, Chairman of the HCMC Real Estate Association, the demand of the market is the demand forever, especially the land segment because Vietnamese psychologists really love the land.

Fever of the real estate market

“The land fever based on the heavily-invested transport infrastructure in the city is not a virtual fever, but it has been used by market players for a long time. Even the information about some districts to the district, or there are many super projects of the real estate are also being used by the world’s capital” said Chau.

According to Chau, it is necessary to understand the nature of the past land fever is “fever” innocently, because the product line comes from the actual needs, legal clarity, complete infrastructure along with the stimulus of development infrastructure, if the price increase is understandable.

However, with the product line not coming from the actual needs, welcome the ambiguous and unclear legal planning information, smuggled infrastructure, but the price is constantly rising, it is definitely virtual increase.

Talking about the potential of the land segment, expert Phan Cong Chanh said that HCM City is the most populous state in the country, the migration rate is very high, while the land cannot expand, the housing demand can only increase but not decrease.

However, according to Chanh, there are fundamental factors that cannot be ignored by investors and buyers alike.

The first is the liquidity, which wants to have real estate liquidity must come from real needs, not “non-solitary” places.

Second, the product must be legally clear, because the greatest risk to individual investors is to buy land with incomplete legal status.

The third is not using too high financial leverage, to know “cut your coat according to your cloth” and finally to determine the words when buying, not when selling, that is to analyze carefully before making a purchase decision. Buy at or below the market price and not buy it at all costs.

According to Ngo Quang Phuc, Deputy General Director of Him Lam Land, not discussing the need, because the demand for the land segment is always very large. The most important issue of land investment must first be legal, to understand the land is not in the planning and having a red book.

The second point to notice is the location and potential development of the investment site, which must be the place of the reality: from the realities of real home needs to the reality of the surrounding services to the fact of moving there is no advantage.

Another equally important issue is that if buying a plot of land in a well planned urban area pay attention to the capacity of the investor. By all this determines the added value of the product in the future.

“The same project, but if a developer has the capacity, prestige deployment will make the project value increase quite a lot after the formation, but also that project by a weak investor capacity, The slippage in investment will reduce the value of the project, “Phuc said.

Mr. Phuc explained that this is the reason why there are projects in the same location, but a project costing up to 1320 USD per square meter is always sought by customers, whereas the other project Selling less than 440 USD / sqm but still not selected by customers.

Thus, according to Phuc, the real value element in real estate is especially important for real estate investors and businesses today.

Tough planning, good supply will be scarce

Tran Thi Cam Tu, the general director of Eximrs Company, a company with experience in land-based investment, shared not only in Ho Chi Minh City but also with Dong Nai. Binh Duong recently has the policy of tightening planning, limiting the division of the ground floor. This fact will make the coming supply of legally-explicit products scarce.

“In fact, the biggest risk of the land segment for many years has been mainly due to the liquidity of the market. Time after the market stabilized again, formed a new higher price floor. For long-time land investors, if there is the possibility of good capital, rarely suffer losses. There is a hole that investors use financial leverage, forced to sell products to solve the financial problems before heavy losses” Tu stressed

Recently, the Danh Khoi A Chau Real Estate Company (DKRA) has had a survey of land market trends in HCM City for many years. According to the analysis of DKRA, in the past 10 years, land market in Ho Chi Minh City, in which the focus is on the East, despite the fact of experiencing many ups and downs. However, after each quiet, the market then recovered with a new higher price.

Given the 2006 milestone to date, DKRA said that in the past 10 years, land prices in the East have risen 5 to 10 times. For example, in District 2, in 2006, the land area of An Phu – An Khanh is priced at $352 – $880 / sqm, but has soared to $126,261 – $296,522 / sqm.

Similarly, land prices in Thu Thiem at the same time increased from $396 – $528 / sqm to $4488 – $6820 / sqm. The land area of Thanh My Loi 10 years ago was priced at $264 – $572 / sqm, now reached the threshold of $1100 – $3520 /sqm.

The actual project of the real estate market

Not only has increased price in District 2, the land of District 9, Thu Duc has also fluctuated and escalated in a decade. In the past 10 years, land prices have fluctuated sharply from $132 – $264/ sqm in 2006, reaching $814 – $1408 / sqm today.

The reason that land prices have increased sharply in the last 10 years is due to infrastructure. The new bridge, road and transportation projects worth $50 million invested in the East area have significantly increased land prices.

Ph D. Dinh The Hien, a specialist in economics and real estate, said that land prices soared in the recent past after the real estate market have recovered are easy to understand.

From mid-2015 up to now, land plots in District 9 up 100% is reasonable. For land in the center, townhouse, land at the project, the price increase with the lowest profit is also from 7 – 10% per year.

From 2010 up to now, there are naturally rising real estate areas as the ground has been compressed for many years, with good location areas, improved infrastructure, or populated areas. The price increase of 200-300% is also normal. By earlier, land prices were valued at a low level and for a long time, the land prices in those areas did not increase.

In other regions, the growth rate of 60-70% is just marginally higher than the bank interest rate. In summary, according to Mr. Hien, with the land value is real, the price increase last time is very normal according to market rules, nothing to worry about.

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